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THE INTERNATIONAL MONETARY FUND

1972–1978

VOLUME III: Documents

Title Page

THE INTERNATIONAL MONETARY FUND

1972–1978

Cooperation on Trial

VOLUME III: Documents

Edited by

Margaret Garritsen de Vries

INTERNATIONAL MONETARY FUND

WASHINGTON, D. C.

1985

Copyright

© 1985 International Monetary Fund

Library of Congress Cataloging in Publication Data

De Vries, Margaret Garritsen, 1922–

The International Monetary Fund, 1972–1978.

Includes indexes.

Contents: v. 1–2. Narrative and analysis — v. 3. Documents.

1. International Monetary Fund—History. I. Title. HG3881.5.I58D42 1985 332.1’52 85-2352

ISBN 9781451940220 (v. 3)

ISBN 0-939934-43-4 (set)

The paper used in this publication meets the minimum requirements of American National Standard for Information Sciences—Permanence of Paper for Printed Library Materials, ANSI Z39.48-1984.

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Preface to Volume III

This volume comprises the main documents of the International Monetary Fund for the years 1972 through 1978 that are cited in Volumes I and II, Narrative and Analysis. Several of these documents, especially those in Parts One and Two, and many of the Executive Board decisions in Part Seven were written prior to the Second Amendment of the Articles of Agreement, which took effect on April 1, 1978. Unless otherwise indicated, references to the Articles in these documents and decisions are to the Articles as they were after the First Amendment, which applied from July 28, 1969 to March 31, 1978.

In January 1972, at the request of the Board of Governors, the Executive Directors, assisted by the Fund staff, began to develop plans for reforming the international monetary system. In September 1972, negotiations for reforming the system were begun by the ad hoc Committee of the Board of Governors on Reform of the International Monetary System and Related Issues (Committee of Twenty), especially set up for that purpose in July 1972. The Committee continued its deliberations until June 1974. While these deliberations were going on, the Fund staff prepared and circulated to the Executive Board several studies evaluating particular features of a reformed system that were being considered simultaneously in the Committee of Twenty. Some of these studies were discussed in the Executive Board and were also made available to the Committee of Twenty. Part One of this volume contains selections from these studies and the Executive Directors’ report of August 1972. Part Two contains documents pertaining to the Committee of Twenty—the relevant resolutions of the Board of Governors, the Committee’s two reports, including the Final Outline of Reform, and the communiqués that the Committee issued. Also included is a paper, with two supplements, outlining a plan for a committee of the Board of Governors that was prepared by the Fund’s General Counsel and that preceded formation of the Committee of Twenty.

When the Committee of Twenty was officially terminated in October 1974, the Interim Committee of the Board of Governors on the International Monetary System was established to advise and report to the Board of Governors on developments in the international monetary system. Part Three comprises the resolution establishing the Interim Committee and the communiqués that the Committee issued through the end of 1978.

After October 1974, the Executive Board prepared and forwarded to the Interim Committee proposals on several topics, including increases in quotas and recommendations concerning the SDR. After consideration by the Interim Committee, these proposals were submitted to the Board of Governors, in the form of draft resolutions. Part Four contains the Executive Directors’ reports and the resolutions adopted by the Board of Governors on the Sixth and Seventh General Reviews of Quotas, as well as an aide-mémoire from the Managing Director with regard to the Seventh General Review of Quotas. Part Five contains the Executive Directors’ reports and selected resolutions adopted by the Board of Governors with regard to SDRs, as well as a proposal by the Managing Director for an allocation of SDRs for the third basic period.

In July 1974, the Executive Directors turned their attention to amending the Fund’s Articles of Agreement. As draft amendments were being considered, the Executive Directors requested and received guidance from the Interim Committee. Part Six contains a number of documents relating to the Second Amendment.

Part Seven contains the Fund’s basic documents—the Articles of Agreement after the Second Amendment, the amended By-Laws and Rules and Regulations of the Fund, and selected general decisions taken by the Executive Board in the seven years ended in 1978.

In October 1974, in addition to the Interim Committee, there was also established a Joint Ministerial Committee of the Boards of Governors of the Bank and the Fund on the Transfer of Real Resources to Developing Countries (Development Committee). Part Eight contains the resolution establishing the Development Committee, the communiqués and reports issued by the Committee through the end of 1978, and related reports.

Part Nine contains selected communiqués issued by the Group of Ten and the Group of Twenty-Four from 1972 through 1978. Although not documents of the International Monetary Fund, these communiqués are closely related to the history of the Fund for those years.

April 1985

M. G. de V.

Contents

• Preface to Volume III

  • PART ONE The Fund’s Plans for Reforming the System

• SKETCH OF A REFORMED SYSTEM

  • (A) Reform of the International Monetary System—A Sketch of Its Scope and Content (March 7, 1972)

  • (B) Reform of the International Monetary System—A Sketch of Its Scope and Content: Supplementary Note on Possible Fund Financing of Short-Term Capital Movements (May 2, 1972)

  • (C) Reform of the International Monetary System—A Sketch of Its Scope and Content: Supplementary Note on Gold Purchases by the Fund (May 2, 1972)

• REPORT OF THE EXECUTIVE DIRECTORS

  • Reform of the International Monetary System (August 18, 1972)

• INDICATORS OF NEED FOR BALANCE OF PAYMENTS ADJUSTMENT

  • Reserves and Basic Balances as Possible Indicators of the Need for Payments Adjustment (January 10, 1973)

• LINK BETWEEN SDRs AND DEVELOPMENT FINANCE

  • Allocation of SDRs and Financing of Economic Development (February 8, 1973)

• ASSET SETTLEMENT

  • (A) Approaches to Consolidation, Convertibility, and Asset Settlement (February 28, 1973)

  • (B) Technical Choices Involved in Arrangements Regarding Consolidation, Convertibility, and Asset Settlement (May 16, 1973)

• SALE OF THE FUND’S GOLD

  • Paper on Gold (May 15, 1974)

  • PART TWO The Committee of Twenty

• BACKGROUND TO FORMATION OF THE COMMITTEE OF TWENTY

  • (A) An Advisory Committee of the Board of Governors—Outline of an Illustrative Plan (January 24, 1972)

  • (B) A Special Committee of the Board of Governors—Outline of an Illustrative Plan with Variant Provisions: Supplement 1 (March 7, 1972)

  • (C) A Special Committee of the Board of Governors—Outline of an Illustrative Plan with Revised Variant Provisions: Supplement 2 (March 31, 1972)

• ESTABLISHMENT OF THE COMMITTEE OF TWENTY

  • Establishment of a Committee on Reform of the International Monetary System and Related Issues (July 26, 1972): Resolution No. 27-10

• INTERIM REPORT AND FIRST OUTLINE OF REFORM OF THE COMMITTEE OF TWENTY

  • (A) Report to the Board of Governors of the International Monetary Fund by the Chairman of the Committee on Reform of the International Monetary System and Related Issues (September 24, 1973)

  • (B) Reform of the International Monetary System (September 28, 1973): Resolution No. 28-5

• FINAL REPORT AND OUTLINE OF REFORM OF THE COMMITTEE OF TWENTY

  • Report to the Board of Governors of the International Monetary Fund by the Committee on Reform of the International Monetary System and Related Issues (June 14, 1974)

• COMMUNIQUÉS OF THE COMMITTEE OF TWENTY

  • September 28, 1972

  • March 27, 1973

  • January 18, 1974

  • June 13, 1974

    • Detailed Statement of Immediate Steps to Assist the Functioning of the International Monetary System

• COMPLETION OF WORK OF THE COMMITTEE OF TWENTY

  • Composite Resolution on the Work of the Ad Hoc Committee on Reform of the International Monetary System and Related Issues and on a Program of Immediate Action (October 2, 1974)

  • Final Report of the Ad Hoc Committee on Reform of the International Monetary System and Related Issues (October 2, 1974): Resolution No. 29-7

  • Other Immediate Steps (October 2, 1974) Resolution No. 29-10

  • PART THREE The Interim Committee

• ESTABLISHMENT OF THE INTERIM COMMITTEE

  • Establishment of an Interim Committee of the Board of Governors on the International Monetary System (October 2, 1974) Resolution No. 29-8

• COMMUNIQUÉS OF THE INTERIM COMMITTEE

  • October 3, 1974

  • January 15–16, 1975

  • June 10–11, 1975

  • August 31, 1975

  • January 7–8, 1976

  • October 2, 1976

  • October 6, 1976 (Announcement)

  • April 29, 1977

  • September 24, 1977

  • April 30, 1978

  • September 24, 1978

  • PART FOUR General Reviews of Quotas

• INCREASES IN QUOTAS OF MEMBERS—SIXTH GENERAL REVIEW

  • Report of the Executive Directors to the Board of Governors (February 19, 1976)

• INCREASES IN QUOTAS OF MEMBERS—SEVENTH GENERAL REVIEW

  • (A) Aide-Mémoire from the Managing Director on the Seventh General Review of Quotas (August 4, 1978)

  • (B) Report of the Executive Board to the Board of Governors (October 25, 1978)

  • PART FIVE SDRs

• SPECIAL DRAWING ACCOUNT—RULES FOR RECONSTITUTION OF SDRs

  • (A) Report of the Executive Directors to the Board of Governors (November 15, 1972)

  • (B) Report by the Executive Directors to the Board of Governors (December 5, 1977)

• ALLOCATION OF SDRs FOR THE THIRD BASIC PERIOD

  • (A) Report by the Managing Director to the Board of Governors and to the Executive Directors (June 29, 1977)

  • (B) Proposal by the Managing Director of the International Monetary Fund (October 25, 1978)

• SELECTED RESOLUTIONS ON SDRs

  • Amendment of Section 20(b) of the By-Laws (March 20, 1972): Resolution No. 27-3

  • Prescription of the Bank for International Settlements as a Holder of Special Drawing Rights (January 21, 1974): Resolution No. 29-1

  • Extension of Suspension of Operation of Article XXV, Section 8(a) (March 4, 1974): Resolution No. 29-2

  • PART SIX Amending the Articles of Agreement

• DRAFTING A NEW ARTICLE IV

  • (A) Staff Draft of and Commentary on Amendment of Article IV (March 14, 1975)

  • (B) Provisions Regarding Par Values and Exchange Stability Under Article IV by the Executive Director for France, Jacques Wahl (April 9, 1975)

  • (C) Commentary on Alternative Approach to Article IV on Exchange Rate Arrangements by the Executive Director for the United States, Sam Y. Cross (May 1, 1975)

• AGREEMENT ON DRAFT AMENDMENT OF ARTICLE IV

  • Declaration of Rambouillet (November 17, 1975)

• SUBSTITUTION ACCOUNT FOR GOLD

  • (A) A Substitution Account for Gold (April 23, 1975)

  • (B) Possible Provisions of a Gold Substitution Account (July 28, 1975)

  • (C) An Alternative Approach to the Gold Substitution Account: Observations of Jacques de Groote (September 26, 1975)

• PROPOSED AMENDMENT OF ARTICLES OF AGREEMENT

  • Proposed Second Amendment to the Articles of Agreement of the International Monetary Fund (March 1976)

  • PART SEVEN Basic Documents

• ARTICLES OF AGREEMENT

  • Articles of Agreement of the International Monetary Fund (April 1, 1978)

• BY-LAWS AND RULES AND REGULATIONS

  • By-Laws of the International Monetary Fund (August 1, 1979)

  • Rules and Regulations of the International Monetary Fund (August 1, 1979)

• EXECUTIVE BOARD DECISIONS

  • Selected Decisions of the Executive Board (January 1, 1972–December 31, 1978)

  • PART EIGHT The Development Committee

• ESTABLISHMENT OF THE DEVELOPMENT COMMITTEE

  • Establishment of Joint Ministerial Committee of the Boards of Governors of the Bank and the Fund on the Transfer of Real Resources to Developing Countries (October 2, 1974): Resolution No. 29-9

• COMMUNIQUÉS OF THE DEVELOPMENT COMMITTEE

  • October 2, 1974

  • January 17, 1975

  • June 12–13, 1975

  • September 3–4, 1975

  • January 9, 1976

  • October 3, 1976

• REPORTS OF THE DEVELOPMENT COMMITTEE

  • Report of the Joint Ministerial Committee of the Boards of Governors of the Bank and the Fund on the Transfer of Real Resources to Developing Countries (October 1974–June 1975)

  • Report of the Joint Ministerial Committee of the Boards of Governors of the Bank and the Fund on the Transfer of Real Resources to Developing Countries (July 1975–June 1976)

  • Report of the Joint Ministerial Committee of the Boards of Governors of the Bank and the Fund on the Transfer of Real Resources to Developing Countries (July 1976–June 1977)

  • Report of the Joint Ministerial Committee of the Boards of Governors of the Bank and the Fund on the Transfer of Real Resources to Developing Countries (July 1977–June 1978)

• REVIEW OF PERFORMANCE OF THE DEVELOPMENT COMMITTEE

  • (A) Report of the Executive Directors of the Bank and the Fund Concerning the Review of Performance of the Development Committee (1976)

  • (B) Review of the Performance of the Development Committee (1978)

  • PART NINE Communiqués of Group of Ten and Group of Twenty-Four

• SELECTED COMMUNIQUÉS OF THE GROUP OF TEN

  • March 9, 1973

  • March 16, 1973

  • September 29, 1974

  • December 19, 1975

• SELECTED COMMUNIQUÉS OF THE GROUP OF TWENTY-FOUR

  • April 6–7, 1972

  • June 9–10, 1974

  • June 8–9, 1975

  • August 30, 1975

  • January 6, 1976

  • October 2, 1976

  • April 26, 1977

  • April 28, 1978

  • September 22, 1978